Alliance & Leicester exit fee - is this a possible loophole?

NumboJumbo

I am in an email exchange with A+L over the £25 exit fee they charge when
you transfer money out of their Direct Mini Cash ISA. I am basically saying
that I don't think they have very good grounds to charge this fee and I'd
like some opinions from anybody out there to say that my argument, which is
outlined below is a load of spherical objects or whether there is something
to it.

My argument revolves around point 5.5 in their T+ C's http://www.alliance-leicester.co.uk/savings/onlinesavertariff2.pdf which basically states
that an exit fee '...may be payable'. I am focusing in on the word 'MAY',
because to me it implies there are circumstances where the fee may NOT be
payable. In fact I argue that they could could just as easily insert the
phrase 'MAY NOT' be payable and still be just as definitive about whether an
exit fee should be charged or not.

How about if we look at my argument from a different perspective. What if, in their T
+ C's they inserted the words 'MUST', 'IS' or 'WILL' be payable instead of
the word 'MAY' be payable. From that point of view there would be no doubt
that the exit fee would have to be paid. But the word 'MAY' does not have
the same clout. It implies that there maybe certain circumstances when the
exit fee does not have to be paid. Sure, they reserve the right to charge
the exit fee, but when and for what reason? They don't state the when and
for what reason in their T+C's. So when I come to transfer my money out from
A+L, how will I know that the circumstances under which I am transferring my
money are indeed the circumstances in which I will get charged. If they
don't state the reason for charging me the exit fee (because remember the
word 'MAY' by implication infers that there are circumstances where the
charge is not payable), then how can they justify the basis for charging me
the exit fee.

FYI, in my email exchange with A+L, I have challenged them to be able to
uphold the definition of the word 'MAY' in a court of law to mean that this
exit fee has to be paid in all situations regardless of the
circumstances. (which incidentally I believe the word 'MUST' be payable would
give them the clout to do this ie. payable in all situations regardless of
the circumstances). If they can't do that, then by inference, they
cannot charge the fee all of the time. If they don't charge the fee all the
time, then what are the circumstances when they don't charge the fee. I
would like to know this as I'm trying to find out the circumstances under
which I can transfer my money without being charged an exit fee, which the
word 'MAY' (and not 'WILL', MUST' or 'IS') implies that I can do.

I hope you get the gist of what I am trying to convey here. It basically
boils down to the implications and interpretation of the word 'MAY' and the potential for A+L not having a basis on which to charge the exit fee. Any
thoughts anyone?

YorkshireBoy

I've not checked your link, and I haven't got an A & L ISA, but I suspect that if they use the word "exit", then this could have 2 meanings...

1/ CLOSE (and send any monies to you)

2/ TRANSFER (to another provider)

Their interpretation of the word "may" could then be read as...

We *WILL NOT* charge a fee if you close the ISA.

We *WILL* charge a fee if you ask us to transfer the ISA to another provider.

Milarky

I'm no lawyer, either, but isn't the legal implication of their saying ''we may charge'' that they are simply giving themselves permission to charge, and that you are agreeing that they are giving themselves this permission as part of the deal?

Every contract amounts to an:

'Offer'[they write the T&Cs],
'Consideration'[this is your money in exchange for their interest on it] &
'Acceptance'[where you sign to say that everything in the offer is agreed between you and them]

But even if you haven't a hope I applaud your tenacity...

YorkshireBoy is on the right lines to challenge them however - it cannot be objectively claimed that it costs them 'nothing' to allow you to withdraw by the same method -a cheque - as a transfer - just that there is some extra work entailed with a transfer - since they send the cheque with some paperwork rather than simply give it to you. That said, you do the 'spadework' of finding an alternative ISA provider, checking that they will accept a transfer, and they then deal with A&L for you. Another point is that A&L will act - in reverse - as the recipient of ISA transfers and not charge [for obvious reasons] even though this must involve them in as much work as it does for them to send a payment elsewhere. Thus the charge does not arise from anything specific that they do to justify it - it is a differential charge in other words - not one for 'work' done.

Now where can anybody go with that argument?

MarkyMarkD

I don't see any remote argument which can be used to challenge this £25 fee. It was in the Ts & Cs which you signed up to when opening the account. The amount hasn't even been changed over time, as it has with the £295 mortgage exit charge.

The document referred to in the OP actually just states that there is a £25 fee for transferring an ISA to another institution. It doesn't include the "may" stuff referred to at all. But those words are included in the Ts & Cs elsewhere on the site such as here.

"May" is a common usage in terms and conditions. It gives the bank/whatever the option to waive the fee, if there are circumstances in which they choose to do so. It does NOT give the other party the option to decide they don't want to pay the fee!

Paul_Varjak

The £25 'exit fee' is only payable if you 'transfer' the funds in your ISA to another ISA provider. The T&Cs allow you to transfer part of the funds. I wonder if they only levy the 'exit fee' if you transfer ALL the funds - in effect, closing the ISA account.

If you put cash into the A&L ISA this year, you could not transfer your money to another ISA provider unless you transferred it all. But if the money was all put in during previous year(s) you could, perhaps, transfer all but the minimum balance (£1) to another ISA provider and escape the £25 exit fee!? You could then, perhaps, take out the £1 in cash!?

It may not work, but that is all I can think of!

Milarky

"5.5 If You wish to transfer the funds in Your Account to an ISA at another financial institution, an exit charge, as detailed in our Tariff for Additional Services, may be payable. This will be withdrawn from the total balance on the Account unless You have already made a payment through an alternative method that We have agreed."

Isn't the 'may' here referring to an option about how to pay the transfer exit penalty rather than whether to pay?. You can pay it from non-transferred funds, thus preserving you ISA capital OR you can have it taken from your ISA capital and less remains tax-free

MarkyMarkD

No, I don't think so, Milarky. The fee "may" be payable - end of sentence. (And as discussed above, that's at their option, not the customer's). And then, as you rightly point out, it would appear that the fee can be paid separately to avoid reducing the ISA-eligible capital balance.

lipidicman

I hate to rain on your parade

may[size=-1]1[/size] ([font=verdana,sans-serif] P [/font]) Pronunciation Key (m)
aux.v. Past tense might (mt)

1. To be allowed or permitted to: May I take a swim? Yes, you may.
2. Used to indicate a certain measure of likelihood or possibility: It may rain this afternoon.
3. Used to express a desire or fervent wish: Long may he live!
4. Used to express contingency, purpose, or result in clauses introduced by that or so that: expressing ideas so that the average person may understand.
5. To be obliged; must. Used in statutes, deeds, and other legal documents. See Usage Note at can[size=-1]1[/size].

I looked this up because I have seen other T&Cs use 'may'.

'may be charged' basically means 'is permitted to be charged' as I read it. A&L may well let you off out of goodwill, but if you took it to the lawyers they would laugh you out of court!

lipidicman

Is that it? Did I end the discussion?

My girfriend said the confusion arises because people use 'can' instead of 'may' these days when asking permission (eg 'can I go' rather than 'may I go') and the terms and conditions are clearly asking your permission for a charge to be made in the event of a transfer

ReportInvestor

A move by Northern Rock may blaze the trail to end this unsatisfactory state of affairs.

Although their exit charge is high (£250 - second only to the dreaded A&L) they have said that they will stick with the charge publicised at the time you take out your mortgage.

Let's hope others in the industry follow suit so that we all know where we stand and we don't need to look for legal loopholes or campaigning journalists.

lipidicman

On the ISA front, Portman introduced a charge, but it is not retrospective. I would have said that they couldn't introduce a charge retrospectively, but maybe they can?